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GOODWILL AND OTHER INTANGIBLES | 9 Months Ended
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Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER INTANGIBLES | GOODWILL AND OTHER INTANGIBLES During the fourth quarter of each year, the Company assesses its goodwill and indefinite-lived intangible assets assigned to each of its reporting units. In addition, the Company may test goodwill in between annual test dates if an event occurs or circumstances change that could more-likely-than-not reduce the fair value of a reporting unit below its carrying value. During the first quarter of 2024, the Company reduced the outlook of its PowerDrive Systems business in response to volatility in actual and expected customer production schedules. This was viewed as a triggering event, and as a result the Company performed an interim quantitative analysis of the fair value of the PowerDrive Systems reporting unit. The estimated fair value was determined using a combined income and market approach, consistent with the Company’s analysis performed during the fourth quarter of 2023. The most critical assumptions used in the calculation of the fair value of the PowerDrive Systems reporting unit were projected revenue growth rates, projected operating income margin, and discount rates. Additionally, at the time of that assessment, the carrying value of the PowerDrive Systems reporting unit was higher than the carrying value used in the most recent quantitative analysis in 2023 due to capital investments made in the business. Based on this interim impairment test, the PowerDrive Systems reporting unit had an estimated fair value that exceeded its carrying value, including goodwill, by approximately 5%, resulting in no impairment. The fair value of the PowerDrive Systems reporting unit’s goodwill is sensitive to differences between estimated and actual cash flows, including changes in the projected revenue, projected operating margin and discount rate used to evaluate the fair value of these assets and market multiples assumptions applied by the Company. Future changes in the judgments, assumptions and estimates from those used in valuations and goodwill impairment testing, including discount rates or future operating results and related cash flow projections, could result in significantly different estimates of the fair values in the future. An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect the Company’s financial statements in any given year. As further described in Note 22, “Reportable Segments,” as a result of the previously disclosed reportable segment realignment, the Company disaggregated certain entities within one of the Company’s historical goodwill reporting units across two reporting units: Drivetrain & Morse Systems and Battery & Charging Systems. As a result of this change, the Company allocated goodwill to these two reporting units on a relative fair value basis. The Company estimated the fair values of the businesses to be split from the historical reporting unit based upon the present value of their anticipated future cash flows. The Company’s determination of fair value involved judgment and the use of estimates and assumptions. In conjunction with the goodwill allocation, the Company performed a quantitative impairment assessment of the historical reporting units’ goodwill immediately before and after the segment realignment. The quantitative analyses did not result in any impairment charges as the fair value of each reporting unit exceeded its respective carrying value. The disclosures below have been updated accordingly, which included recasting prior period information for the new reporting structure. Other than as described above, the Company noted no events or circumstances related to any of the Company’s reporting units in the three and nine months ended September 30, 2024 that required additional assessment or testing. A summary of the changes in the carrying amount of goodwill are as follows:
(in millions) | Turbos & Thermal Technologies |  | Drivetrain & Morse Systems |  | PowerDrive Systems |  | Battery & Charging Systems |  | Total
Gross goodwill balance, December 31, 2023 | $ | 1,257 |  |  | $ | 1,126 |  |  | $ | 481 |  |  | $ | 651 |  |  | $ | 3,515 |
Accumulated impairment losses, December 31, 2023 | (502) |  |  | — |  |  | — |  |  | — |  |  | (502) |
Net goodwill balance, December 31, 2023 | $ | 755 |  |  | $ | 1,126 |  |  | $ | 481 |  |  | $ | 651 |  |  | $ | 3,013 |
Goodwill during the period: |  |  |  |  |  |  |  |  |
Other, primarily translation adjustment | 4 |  |  | 1 |  |  | 3 |  |  | 6 |  |  | 14 |
Ending balance, September 30, 2024 | $ | 759 |  |  | $ | 1,127 |  |  | $ | 484 |  |  | $ | 657 |  |  | $ | 3,027 |
The Company’s other intangible assets, primarily from acquisitions, consist of the following:
|  |  | September 30, 2024 |  | December 31, 2023
(in millions) | Estimated useful lives (years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Amortized intangible assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Patented and unpatented technology | 5 - 15 |  | $ | 364 |  |  | $ | 169 |  |  | $ | 195 |  |  | $ | 364 |  |  | $ | 145 |  |  | $ | 219 |
Customer relationships | 6 - 15 |  | 643 |  |  | 332 |  |  | 311 |  |  | 641 |  |  | 305 |  |  | 336 |
Miscellaneous | 2 - 5 |  | 10 |  |  | 8 |  |  | 2 |  |  | 9 |  |  | 6 |  |  | 3 |
Total amortized intangible assets |  |  | 1,017 |  |  | 509 |  |  | 508 |  |  | 1,014 |  |  | 456 |  |  | 558 |
Unamortized trade names |  |  | 6 |  |  | — |  |  | 6 |  |  | 6 |  |  | — |  |  | 6 |
Total other intangible assets |  |  | $ | 1,023 |  |  | $ | 509 |  |  | $ | 514 |  |  | $ | 1,020 |  |  | $ | 456 |  |  | $ | 564 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-30/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 350 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/350-20/tableOfContent + Details
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